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States Vary in Ability To Recover Medicaid Costs From Estates of Deceased Beneficiaries

Programs in different states that recover the cost of Medicaid services from the estates of some deceased beneficiaries "differed markedly" in their ability to recover funds, according to a study from the AARPPublic Policy Institute, CQ HealthBeat reports. Under the 1993 Omnibus Budget-Reconciliation Act, states are required to implement programs that recover the cost of long-term care and related Medicaid services from some beneficiaries' estates.

Oregon had the highest recovery rate in fiscal year 2003, at 2.2% of total long-term care costs. Eight states collected more than 1% of long-term care costs in FY 2003, according to the study. Louisiana recovered 0.1% of its long-term care spending, and Georgia, Texas and Michigan did not have active asset-recovery programs during the survey period.

The median recovery rate nationwide was about 0.5%, which the study said was "a relatively small recovery rate but in total dollar amounts not insignificant." States recovered a total of $347.4 million in 2003, up from $72 million reported in a 1996 version of the same study.

The study, conducted by the American Bar Association Commission on Law and Aging, said there was "tremendous variation in every aspect of estate recovery" in different states, including definitions and size of estates and services recoverable, as well as procedures on exemptions, deferrals, use of liens and notice to beneficiaries. The study said officials in most states were satisfied that the program allowed "individuals to receive long-term care services at a time they are needed and repay costs later," but some officials said there was potentially a "chilling effect" on applications because of misunderstandings about the program (CQ HealthBeat [1], 7/5).

Optional Beneficiaries Discussed

In other Medicaid news, the Senate Special Committee on Aging on June 28 held a hearing that addressed the Bush administration's goal of allowing states to cut optional Medicaid beneficiaries, CQ HealthBeat reports. Spending on beneficiaries who are considered optional accounts for about 60% of total Medicaid spending.

If states are allowed to cut optional beneficiaries, the beneficiaries "will simply join the ranks of the millions of uninsured Americans and end up costing taxpayers far more in the long run," Committee Chair Gordon Smith (R-Ore.) said.

Diane Rowland, executive director of the Kaiser Commission on Medicaid and the Uninsured, said, "Some of the sickest and poorest Medicaid beneficiaries are considered 'optional,' and many of the 'optional' benefits provided under Medicaid, such as prescription drugs and rehabilitation services, often are integral to appropriate care and functioning of the population Medicaid services."

Rowland added that reducing benefits for optional beneficiaries "will not achieve significant savings for states or facilitate Medicaid's ability to meet the health needs of the low-income population and adequately pay their providers nor will they help address the increasing long-term care needs of an aging population" (CQ HealthBeat [2], 7/5).

Medicaid Commission News

The federal commission tasked with recommending ways to cut $10 billion over five years from Medicaid has 60 days until its report is due; however, neither the commission's members nor a meeting schedule have been announced.

Democrats "reacted angrily" to HHS Secretary Mike Leavitt's announcement in May that he would appoint the bipartisan commission's voting members and have declined to appoint nonvoting members, CQ HealthBeat reports.

Sen. Jeff Bingaman (D-N.M.), who along with Smith pushed for an independent Medicaid commission, said, "I had hoped for a commission that could produce a report that both sides of the aisle could buy into."

A congressional aide said the commission "can't get Democrats of any consequence from anywhere" to join. The aide added that producing a report by Sept. 1 "seems extremely optimistic at this point." Congressional insiders said the delay "lengthens the odds against the commission having much impact" when the Senate Finance and House Energy and Commerce committees meet in mid-September for markups of "budget reconciliation" legislation, CQ HealthBeat reports.

However, HHS spokesperson Bill Hall said the commission members will be appointed soon, and a report will still be issued by Sept. 1. A Republican aide said work to achieve the cuts is already underway, adding, "We have never pinned our hopes to the commission" (CQ HealthBeat [3], 7/1).

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